Open Chat... All Day, Every Day! Express Your Views, Debate, and Challenge the Views of Others!

In order to keep up with the nature of free, spirited debate, I wanted to place the chat feature at the top of the homepage. This ensures people can come here and share their views on anything they wish and not have it be related to any specific discussion. Here, people can share ideas, links, and views "unmoderated" and an their own pace. To me, this makes The Elephant in the Room blog truly a place for debate.

Friday, April 13, 2012

#FF Re-post: Attn: Washington. I Can Take Care of Myself, Thank You

Attn: Washington. I Can Take Care of Myself, Thank You (Originally Posted on November 30th, 2011) - Original Text:

What a funny coincidence! I saw a quote earlier today. It was a comment someone made on CNN.com, and the person who made it was speaking as if they were President Obama. They said, tongue-in-cheek, "I promise to take money away from those who won't vote for me and give it to those that will." HA! My response: check out the post on our blog titled "Progressive Taxes: The Ultimate Conflict of Interest." Since my response, viewership of that blog post has skyrocketed.

Hmmm. First, let's get this out of the way. Social Security is NOT supposed to be a retirement plan. It was originally intended to be a basic insurance plan against the risks of, well, living... you know: old age, becoming handicapped, unemployment, a household losing the primary breadwinner, etc. It was not supposed to be this system where once you reach a certain age then BOOM! You're done! You can start licking those chops because here comes some of that juicy government money. Either way, that's another debate. It exists (ugh, another horribly run, inefficient government program), and as of right now, that's all there is to it.

Back to those articles. As always, let's keep this simple. Obama wants to extend the payroll tax holiday. For 2011, payroll taxes were reduced. That reduction is set to expire on 1/1/12. What does that mean? Well, in keeping with simplicity: everyone's taxes would go up slightly after the turn of the year. Okay, got it. Good.

Why is this such a big deal? Well, obviously, if the holiday were to be extended it would mean there would be a relative shortage in payroll tax revenue if no further action is taken. There are three ways of handling this issue:

1. The government can take a loan. There is no reason to over-complicate this. It's bad, and debt is the last thing we need.

2. The republican plan. Cut out spending from somewhere else in the budget. Preferably, take a look at some other wasteful, unnecessary government program and slash its budget. It doesn't take a genius to know that LME fully supports this plan.

From the Fox article: "As the deadline approaches, bipartisan political support is building for at least continuing the tax cut -- heading off a politically bruising tax hike. But Obama wants the cost of the payroll tax cut to be made up by an increase in taxes on taxpayers who earn more than $1 million, a trade-off that Republicans reject."

Do you like Obama's idea? Sure! Why not? You get to pay less money, and someone else gets to pay more. That's cool, right? As long as the government takes it from someone else, you're okay! Okay, okay, the facetiousness alarm is blasting right now.

Simply put: Obama's plan makes me sick. Not to get redundant here, but again, see the post "Progressive Taxes: The Ultimate Conflict of Interest." Without repeating that entire article, its premise is that the "poorer" population (in this case the ones receiving the tax break) is a lot larger than the "richer" population (the ones getting the tax hike). If you promise a much larger portion of the population a significant tax benefit while promising the smaller portion a tax hike, don't you think that will get you some votes? Duh... see that post. It's sickening because it is a complete perversion of democracy. Elected officials basically buying voters with sweet tax policies is absolutely disgusting. Okay, that's out of my system.

I don't like it for another reason. Here it is: I can fund my own damn retirement, thank you very much. I don't need my rich uncle's money. I don't need any wealthy person to pay more so I have to pay less. Does anyone find it stunningly embarrassing that every time we need something to be paid for in this country (and yes, it is clouded in the perverted democratic mantra "shared sacrifice") there is no sharing of the sacrifice at all. Democrats point the legislation cannon at the rich and say "pay up, buster!" Theft by legislation is no different than theft with a gun. When does it stop?

Social security as a retirement plan is a terrible idea anyway. It kills financial discipline. Why would anyone run their daily, monthly, and yearly finances with retirement in mind? Why would they save anything? They know the government will be there when they get older so why would they try? I just had to get that out, but again, that's another argument.

Yes, I can run my own retirement. I live within my means, and yes, I do take retirement in mind with every purchase I make. I don't need social security. No one does, and I damn sure don't need the rich to pay for it. People behave in riskier ways now because they know Social Security is there. If that's the case, fine... just make everyone pay for it at an equal tax rate.

You said, "The ironic thing is if these corporations just paid their workers more and took less profits most people would not qualify for a majority of the benefits that re-distribute wealth."

I think you need to understand how fundamental wage labor works. To try to explain this (you did originally message me telling me, "I don't currently, but would like to understand econ," and that's fine... I'm always here to help people understand.

First, why would a corporation just pay people more money. If I run a company, let's say, LME INC, and it's me and 3 janitors, for example. I'm going to put my ad out to hire 3 janitors. My ad basically says:

I get no replies, and therefore I get no employees to help my business grow. I change it to $2.00 per hour... $3.00 per hour. Finally. at $6.50 per hour I get a reply for someone and he isn't qualified. I up it to $7.00 per hour. I get 3 janitors to work for me.

Now, let's say in my town, there are two companies just like me... each need 3 janitors. But there are only a total of 8 janitors in our town. 8 janitors exist for 9 positions. One of us (companies) is going to have to live with 2 janitors, and the others will get three. I don't want to be the guy trying to make it work with 2 janitors, so I put my add out for $10.00 per hour. I try to make sure they have 3 janitors, my competitors advertise $10.10 per hour and so on. Wages rise.

Now, let's say the opposite is true. 3 companies, 9 openings, but there are 30 qualified janitors. I put out an ad for $7.00 per hour, as do my competitors. We all receive applications. We all hire 3 janitors. Say one of my janitors leaves. I need another, but realizing there are so many janitors out there, I put an ad out for $6.50 per hour. I still get a lot of applications.

This is how economics work. A wage is the intersection of the demand for labor and the supply of that labor. A job of a corporation is to make as much money for its owners as it can. Why would anyone own a corporation for any other reason. The job of a worker, just like a corporation is to make as much money as he can. It's that simple.

A corporation has to make profits and cannot pay people more than they deserve. The price (wage) they pay people is not as much of a determination of the corporation as it is a product of the market. If a corporation didn't pay enough, people wouldn't work there. If people do work there, obviously, with all things considered, it IS enough.

Additionally, there is NO LAW, no rule, no regulation stopping anyone in this country from owning a company, an LLC, a corporation of their own. It's truly simple economics.

The stuff you spout of "well, if corporations just paid more than they should..." is what leads to companies like GM being bankrupt. If the market rate for a auto worker is $27 per hour, and that's what the value of their labor is worth (according to the average salary in the industry across the aggregate), how do you expect GM to survive paying $40 for that same labor?

In all honesty, again, I do have to remind myself that you are a self-proclaimed Ron Paul supporter, yet the views you show here are completely the opposite of what Ron Paul would promote. He is absolutely an Austrian-school, free-market guy... and the AS and the free market promote the exact open labor market I have described. Why do you deviate from that?

I understand how you could be confused by me liking ron paul but also liking views that are completely opposite of him!

I confuse myself some time :)

This is how i feel in the best way i can explain it.

The current system is not a real free market.

It is a corporate run market, that is not about making a free fruitful marketplace but is about killing competition through the legal system. Monopolizing industries. Getting corporate welfare. Legislatively protecting itself from consumers ability to hold them accountable ect....

I think the ideas ron paul brings would change things dramatically, it would create more power for the individual and take power away from corporations. It would open the economy up to a real free market. Without things like closed boarders for buying health insurance. It would take away power from companies like TransCanada Corporation, a foreign company threatening US citizens with eminent domain to build keystone XL. It would strengthen contract laws and not allow corporations to use legislation to fight consumers ability to hold them accountable. It would end bailing out failed companies and would help get corporations out of government.

His ideas are so radical it would return this system to what it used to be.

With that said i look at things 2 ways.

Since both parties are big government, big military, big spending there is only two things that separate them (beyond social issues)

Republicans time and time again defend corporate welfare and attack welfare for people.

Democrats attack corporate welfare (some) and push bills for welfare for the people.

Ill choose the party that fights for welfare for people (even though i know they are just as corrupt and a POS)

untill there is a third option like Ron Paul who stands for an actual free market, not the illusion of one. We are all going to continue to follow the current trend of stagnant wages and increasing wealth gaps.

Can you give me a brief (I say brief not to be cocky, but brief like I don't want you to have to continuously repeat yourself) example of corporate welfare. You have said it many times, and I've read your links, but I'm not getting from it what I think you want me to get. What exactly is an example of corporate welfare? If I'm able to seize what it is, or what you say it is, I can better understand the context of this situation.

Secondly, I'm not sure how the examples (true or not) of corporate power (I'm curious how you prove/define this) wrangling through the legal system have anything to do with wages and salaries. I don't want to get off on a tangent here. You brought up the issue of "if corporations paid people more..." which is fair, and I want to keep discussing this topic you brought up. If these things are related somehow, by all means, please explain it. If not, please discuss these issues of wages and salaries. I would really like to understand where you're coming from.

and as far as your example that pretty much says people are only worth what the market says they are. That is a joke. Just because companies can get people to work in china for nothing does not mean that is what those people are worth.

I know my worth. Regardless of what the "market" says im worth

The last company i worked for paid me 12hr for a job that should have been around 20$ an hr (it support).

You know why they did that.

Because the economy was bad and they could.

They did not care about the quality of services they provided. That is why they had almost 100% turn around in a year. That is why they begged me to stay and offered me a promotion and a raise that still was not as high as my current salary for the same type of work when i left. That is why they offered to pay me to be on call AFTER I LEFT THE JOB. They had no clew how much work i did and freaked out once i left. My Managers new my value but their managers did not care and did not want to invest in employee's.

Just because corporations create environments were they are able to take advantage of people. Not because they are trying to make it but because they want EVEN MORE PROFITS does not mean it is justified.

Companies can rig the price of products and attempt to artificially raise there value, apple is going to court for that very issue right now.

Companies are able to do the same thing with employment. They are able to pay people less not because they deserve less or are not as qualified but because they can get someone to take the pay who is desperate and they can increase there own profits.

corporate welfare is tax deductions and subsidies to companies who are extremely profitable and dont need it.

"Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft’s tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.

General Electric, America’s most profitable corporation, reported $50.8 billion in U.S. profits over the past five years, but paid only 11.5 percent of that in federal income taxes. That low tax rate reflected almost $12 billion in corporate tax welfare for GE.

Ford enjoyed $9.1 billion in corporate tax welfare over the past five years. It reported $18.6 billion in U.S. profits over the past two years, but paid a tax rate of only 5.7 percent.

Worldcom paid no taxes at all in two of the last three years, despite reported U.S. profits of $15.2 billion. Worldcom’s total tax rate over the three years was only 1.6%. Corporate tax welfare slashed Worldcom’s tax bill by $5.3 billion over the past five years.

IBM reported $5.7 billion in U.S. profits in 2000, but paid only 3.4 percent of that in federal income taxes. In 1997, IBM reported $3.1 billion in U.S. profits, and instead of paying taxes, got an outright tax rebate. Over the past five years, IBM enjoyed a total of $4.7 billion in corporate tax welfare.

General Motors paid no taxes at all in three of the last five years, despite $12.5 billion in reported U.S. profits. GM’s tax rate for the past three years was negative 1.3 percent. Its corporate tax welfare totaled $3.6 billion over the past five years.

Enron paid no income taxes at all in four of the past five years, despite $1.8 billion in reported U.S. profits. Enron’s total taxes over the five years were a negative $381 million. Its corporate tax welfare totaled $1.0 billion.

El Paso Energy reported $1.6 billion in U.S. profits over the past five years, but paid less than nothing in federal income taxes, getting tax rebates of $254 million. El Paso’s tax rate over the five years was negative 15.5 percent. Its corporate welfare totaled $827 million.

Colgate-Palmolive paid no taxes at all in three of the past five years, despite $1.6 billion in reported U.S. profits. Colgate’s total tax rate over the five years was negative 1.3 percent, due to $595 million in corporate tax welfare.

Navistar, on $1.4 billion in U.S. profits over the past five years, paid only $28 million in federal income taxes, a tax rate of only 2 percent. Navistar’s corporate tax welfare totaled $451 million."

source: http://ctj.org/html/corp0402.htm

I can find you alot of these examples from gasoline subsides to suger subsidies to corn subsidies to corporations paying little or no taxes on 100's or millions of dollars in profits.

YES! Regardless of what you say, your WORTH is what the market says it is. YOUR worth is what someone puts on the check. If you walk in to a potential employer and you claim you're worth $100 per hour, if you are worth $100 per hour, you get it. If he says, "no, based on all the factors, you're worth $50"... if you agree to it, you're worth $50. If you don't you try to settle for more at a different place. In your head, you might think you know what you're "worth," but the reality is... you are worth what someone is willing to pay you. You can prance around all day claiming "I'm worth $1,000,000,000...",.. why not, right? When you get $12 per hour, you are worth $12 per hour. No one would hire you at $1,000,000,000 because that's not what you're worth. This is the simple basis of ALL economics.

To remove the human element, let's talk houses. I own a house. I bought it for around $250,000 (that's an estimate to keep the numbers simple). If I wanted to sell it... I can put up a sign for $300,000. If I get NO interest, that's because people are saying, "you know, it's just not worth that." I can try to sell it for $200,000... I might get a ton of interest because people say "it's worth that."

As far as using free market economics to justify your pay... YES, you pretty much rewrote my example. When the economy goes sour, and there are a LOT of people that need jobs, the price of labor goes down. You have a lot of people saying "I would drop my asking wage to take less to get a job." That drops the price of labor overall. If you leave, FINE! That's your choice. If there is someone to fill the vacancy... they will get there person for $12 per hour. If not, guess what? They will have to increase the wage. If no one joins, they will have to increase it more.

You claim your job is worth $20 per hour. How? Why $20. Why not $200, $2000? It's not worth $20 per hour, it's worth whatever someone signs the check for. It's the same with houses, it's the same when someone says "I want $20,000 for my trade in (car)" and no one gives them $20,000... but someone gives them $15,000. The car is worth $15,000.

This is 100% true, simple economics. In spite of what you want to believe, this is how it works. The interesting thing is: YOU are actually citing this as well when you claim you left because the wage wasn't high enough. You actually are using free market econ to do so. I'm not sure how you don't understand this. I'm not sure how you claim things like "well, I'm really worth this." To sum up everything: you can say you're worth whatever magic number you say you are worth... facts are, econ works... you are worth what someone is willing to pay YOU for your experience, education, etc. etc. etc.

To Loyal Watcher: the best thing you have said yet: I understand how you could be confused by me liking ron paul but also liking views that are completely opposite of him!

I confuse myself some time :)

You are very correct. You are confused. my suggestion: close the mouth, open the ears. You should be learning frmo this stuff. You are really not talking anything that is formal true or correct.

In my opinion, it seems like LME is trying to squeeze blood from a rock. What he is saying is truth 100% it's factual 100% it's economics and economically sound 100% For your own sake, please learn something.

Very true, anonymous (thought I wouldn't have put it in such a sharp-edged approach).

Loyal, you said this: "They did not care about the quality of services they provided. That is why they had almost 100% turn around in a year. That is why they begged me to stay and offered me a promotion and a raise that still was not as high as my current salary for the same type of work when i left. That is why they offered to pay me to be on call AFTER I LEFT THE JOB. They had no clew how much work i did and freaked out once i left. My Managers new my value but their managers did not care and did not want to invest in employee's."

It's the same thing as my janitor example. For your services as a whole (comprising quality, punctuality, experience, etc. etc. etc.) if you don't like what you were getting, you can leave. If they find a new employee, they will, if not, they have to raise their price. You are actually going along with what I'm saying.

Also, if a company doesn't want to invest in its employees, that's its choice. If it doesn't it will hurt the company, and to counter it, they would have to invest (probably in larger salaries) to help the company.

Additionally, maybe you should be open to the fact that corporations aren't as bad as you think they are.

I was actually just being funny.... Im sure it played into your self denial thought and gave u ammo to disregard the multiple facts i have sited over and over.

Everything is not cut and dry for my i look at a picture in 3d. I see beyond what is presented. I am able to look at things with a wide angle. When you view things in that way there are no easy answers or easy solutions. You recognize how many issues there are and how big the problems are.

Alot of people want to simplify things when there is nothing simple about it. Just like LME tried to simplify supply and demand of labor without taking into account the fact ,just like supply and demand with products, supply and demand with labor can be manipulated just like supply and demand with products.

The "market" is not always correct. We sall that with the housing bubble. That was an illusion of value not a real value. It was a fake value propped up derivatives and predatory practices.

Anonymous.... and on a side note, i have learned and still learn from LME and others on this site. Thats why im hear. So i can watch them tear apart my views and see their angle on things. Im not here for kudos and likes.

On the same note i find it fascinating a majority of you people harping at welfare dont hold companies accountable like you hold people accountable. I have provided a tone of information on corporations getting "handouts" and they are doing fine, ur mad at poor people tring to eat.... its sad really

I understand you focused on that part of my statement and you continue to view people as if they are products that's fine. So lets keep people as products like you are were its all about supply and demand.

How do you feel about this part of my statement:

Companies can rig the price of products and attempt to artificially raise there value, apple is going to court for that very issue right now.

But Loyal, people are NOT products. They are simply selling their services to someone who would buy them. THEY are not products; their services (experience, education, work ethic, punctuality, etc on the whole) are what they are selling. They put it on the market and sell it to the highest bidder. I have degrees in econ. I am selling my expertise, experience, and everything of the like to whomever wants to buy it. I'm not a product... my experience, and the whole package is. And yes... the price that my services are bought for IS 100% relative to the supply of my services and similar services and the demand for similar services out there. There is no way to get around that. If I was a construction worker and there were very few construction jobs, I would have to lower my price for someone to take me. It's really that simple.

Since you've asked, I want to be sure, are we moving on from the labor discussion?

What do I think about that statement? It's nearly 100% not true and economically flawed.

Companies can try to "rig" their prices all they want. Please give me an example of "rigging" the price. What do you mean by "rig?"

The market determines the prices. Using a quick example... there are two major ketchup companies: Heinz and Hunts. To keep it simple, they both sell 12 oz ketchup bottles. That's it.

Let's say Heinz says "we are the best, we will charge $2.50 for our ketchup." As far as "rigging" that price... I still don't know what you mean, but let's just say they charge $2.50 for it. Now, let's say Hunts says... "they are good, but we are the best. Because we are the best, we will charge $13.00 for a superior product."

Now... John Q Public goes to the grocery store. The vast majority of ketchup sold will more than likely be Heinz. If Hunts observes this, they will have to lower their price or they will keep losing business to Heinz.

The point is... no matter what, the market determines the price. If people are still willing to buy a product if the price increases (whether you call that rigged or not), that means the product was UNDERPRICED. If people don't, that means it's over priced. A company can try to rig prices all it wants... if people don't buy it, it gets no sales and no revenue.

Keep in mind, the only real rigging that exists is by the government. A good example of this is price fixing for rent. I am not going to go off on that tangent yet... but it's a great example.

As far as your views on corporate welfare relative to personal welfare... I find that commendable, though I think you should get a larger understanding of the corporate part, first. Additionally, it happens a lot less than you're claiming, and a lot of the stuff out there (as you cite) are by journalists, who tend to make mountains out of molehills.

Additionally, Loyal... it's not about "ripping up your views." From basic economic concepts, one can develop opinions whether theoretically or empirically. To me, my job (for anyone and everyone that wants to lend an ear) is to ensure economic fundamentals are understood. It would be the same thing if I went to debate astrophysics with an astronomer. On top of that, as always, it's nothing personal.

LME its so funny how u sight economics in the way its supposed to work and not in the way it actually works...

Its just funny to me how u have it rosy picture about how things should work.

Like the markets should fix themselves. Then they crash and our government bails out banks and large "profitable" companies

Prices should be determined by supply and demand. Then companies are fined millions for price fixing.

Wages should be determined by demand and what companies are willing to pay. But then companies contract hiring out to a small number of staffing agencies who control hiring for whole sectors of local markets and can drive down wages.

Just because it is supposed to work in theory and in the books you have read does not mean the real world application is working in that manner.

Just like government can be good and businesses can be good they both have shown they can be corrupt.

I am just as skeptical of large corporations as i am of large government.

First, there are ALWAYS going to be bad examples... but again, this is such a small percent. People murder, but overall, people are not murderers. I'm not for 100% no regulation, I'm for minimal government regulations. This regulation worked... and that's that. But again, this is very, very rare.

But, to play devil's advocate quickly, the market could have corrected and regulated itself without government regulation:

First, the case you linked (thank you for that) is an example of yes, price fixing or collusion. It's currently illegal. In the Ketchup example, Heinz and Huntz can't both agree formally or informally to both set their prices at say $30 per bottle (they can try, but there is always incentive to cheat and break the deal... that's another topic called Game theory).

But to what I'm getting at is that the market could have regulated this on it's own (unfortunately it did not contain specifics about how they fixed prices and at what level)... but if they did... and consumers thought the price was too high, they wouldn't have purchased TVs. If they didn't purchase TVs, the manufacturers would have had to reduce the prices to drive up sales. Price fixing would have failed, and prices would have fallen.

My previous comment starting with "very fair" was to your NYT link... You then posted something about my "rosy" view of econ.

This is where the problem is. Econ is what I do. It's not all theory based for me. I went to school for it, I work with it daily for my career. I have both real world, empirical experience, and class-room based theoretical experience. As far as you? I'm not sure. It's not an insult, but your views of how econ work... I'm not sure what they are based on. I'm trying to help, but you don't seem to grasp the fundamentals.

Addressing your points:

"Like the markets should fix themselves. Then they crash and our government bails out banks and large "profitable" companies" - They can fix themselves,... IF they were just the markets. The markets are like a pendulum from suppliers of goods and servies to demanders of goods and services. The pendulum swings back and forth between the two... Usually it is pretty balanced. Do you know how it gets off balance? One of the largest causes is a third wheel... usually the government. You actually prove this point. The government should not bail out anybody. Bailouts are an inefficient incentive killer. They alter the playing field and destroy the free market. Minimize the third wheel known as the government (which is simply run by stooges who need votes to gain and retain power, and therefore make laws to do that) and you will have a more efficient, self regulating market. This should sound familiar: these are the fundamental beliefs of Ron Paul.

"Prices should be determined by supply and demand. Then companies are fined millions for price fixing." Price fixing, without a LEGAL component, usually fails. If prices are too high, demanders demand less, revenues fall, corporations need to lower prices... the price fix fails. Notice the LEGAL component. Again, the government, (this stooges who need votes to gain and retain power, and therefore make laws to do that) can price fix. They do it with rent and minimum wage. Using minimum wage as an example... say I'm a senator and I'm up for reelection (you accuse me of real work examples, this is about as close as it gets). I'm behind in the polls. I need some votes. I put forth a law that will increase minimum wage (a MAJOR price fix). The population/voting base is HUGE on at the base of the pyramid with respect to income, so I get a LOT of low-income voters and I win re-election. Again, government is a problem here.

"Wages should be determined by demand and what companies are willing to pay. But then companies contract hiring out to a small number of staffing agencies who control hiring for whole sectors of local markets and can drive down wages." Wait, what? What are you even talking about. If you want to talk about how wages are not determined by supply and demand as they SHOULD be... again, look at minimum wage laws. These artificially fix labor prices. Corporations have absolutely no power to "fix" wages.

Again, corporations might not be as bad as it should be. A market is simply a place where suppliers and demanders meet. The market gets tilted when a third wheel (especially one with bona fide law making capabilities) comes in and distorts it.

You're argument claims government involvement is the problem with why the markets can't operate the way they should. (am i summarizing that correctly?)

So why does government get involved?

It seems to be government is involved because corporations want them to be.

The banking sector cried for help and the FED warned total collapse during the "financial crisis" and they lobbied government to get involved. They had meetings and stuck deals with corporations to save them. The corporations were asking for this help......

With that said i guess what i struggle with is what is the difference between government and business.....

AND how can you hold one accountable and not the other.

From they way u post its as if you see no flaws with business and how it interacts to effect government. In the same note you constantly go on about how government effects business but fail to speak about how business is asking government to intervene and effect its practices.

On the my previous posts i gave stats on how the number of lobbiests have been rising and the amount of money put into politics from companies has gone the last 10+ years.

Its clear that at the same time you are yelling government needs to get out of business we are at a point were businesses seems to be more involved in government that ever before.

Im just trying to get yall to realize that both sides have to be held accountable.

You can't say stop giving food stamps but then say exon mobile deserves a tax break even thought they are making record profits! that's crazy!

We've had a great discussion! I have meetings I have to run to at 1:15 (it sucks, because this has been really good), and I will try to get back to this soon. I'm glad you and I were able to relay back and forth as much as we did (for once, I didn't have meetings) and I would like to keep it going.

To answer you question simply about why government gets involved? My response is: why does government get involved with anything? The simple answer was said above: " [the government], which is simply run by stooges who need votes to gain and retain power, and therefore make laws to do that."

Actually, to quote MN 4 Rick (he really hit the nail on the head)... "But, as it was stated, the government is run by people who desire power, and in order to stay in power, we must have votes. In order to get votes, you must do someone (something?) for people."

Politicians (most very rich, most very wealthy, many that own businesses) want to get votes. How do they do it? They paint pictures. They say, "BIG, nasty, stinky business is bad.., it's why you're held down. Business causes problems, and strife, and all these bad things... so we need to regulate it. We need businesses to make sure you're health is covered, your rent is low, your mortgage is in check, your etc. etc. etc.... oh, by the way... need help stopping these big nasty stinking evil mean businesses? Vote for me? I can do it!"

In reality, through the market and prices and supply and demand, the business should be left alone. It would regulate itself (I've given many examples of this). It's not perfect, and yes, some (a relatively small amount and certainly a smaller amount than we have now) regulation is needed. But not much. The government, to me, has overstepped this desire for regulation and is now in the business of control. It's too much, and our economy is hurting.

Allow me to say this. I completely agree that the "rosy" view LME has according to loyal would work if the government stayed out of it. But, as it was stated, the government is run by people who desire power, and in order to stay in power, we must have votes. In order to get votes, you must do someone for people. That's how progressive taxes and social programs came about.

My solution: TERM LIMITS. If the president is limited, so should the other 2 branches. That senator example that LME gave about minimum wage was spot on. If the government had term limits, the "you scratch my back by voting for me and I will give you things" problem would be eliminated. Government altering of the private market would cease. The market, using the invisible hand and the MOST powerful thing in this world called PRICE, would be able to work and self regulate and no matter how much you want to complain about wages and price fixing and everything like that, in the end, supply and demand would regulate everything openly and freely.

The economic (and free market) theories described (very well I might add) by LME, do have the flaw of being true only in a general sense. It is true in a vacuum, but in real life it is far less simple of a principle and does not apply to everyone/everything.

This can, as pointed out before, be due to government intervention.

- Single example: Minimum wage laws force a lower limit on a wage, which does of course interfere in the free market aspect of wages.

But, it can also be due to no government intervention.

- Single example: A group of corporations collaborating on the prices they set (see: OPEC) near-completely nullifies the free market forces; particularly in cases of an essential, non-elastic (demand stays relatively constant despite shifts in price), limited commodity (hello oil). This of course is illegal in America.

This non-elastic part is particularly important though, as non-elasticity does tend to apply for jobs. Especially in a poor job market; as the opportunity cost of changing degrees as a college graduate is far too high to come close to the pain of a lower-than-average wage in your background.

So while in a general theory, supply and demand tend to meet at what would ultimately be the value (or price) of a product/service, it does not apply to specific instances (all corporations do not HAVE to set salaries/prices at the market prices) and it is extremely tough to apply the theory to a poor job market.

"The economic (and free market) theories described (very well I might add) by LME, do have the flaw of being true only in a general sense. It is true in a vacuum, but in real life it is far less simple of a principle and does not apply to everyone/everything." - A theoretical statement, but not true. The theories described DO work without that third wheel LME describes.

You're correct about min wage.

For OPEC. You are describing an orange issue in an apple talk. Just like you said, OPEC is a non-American company. Collusion is illegal here, but you cite a foreign entity. We could get away from this with our own energy policy, but that's for a different debate.

I can see your attempt to try to equate collusion with inelastic goods, but the market would still regulate it. I will even use food as an example. Everyone MUST eat (as opposed to your oil example, it's not that inelastic, and I will help you and go further into inelastic things using food). If collusion existed among all food suppliers and they fixed prices high, people would farm for themselves. The market would return to the individual. For oil, people would drive less. For TVs they would buy less. Collusion (yes, illegal) would fail and price fixing would fail, just as LME said.

The same applies to labor. As inelastic as it gets, people can adjust. The overall point is: it should be the government that smooths this over. If there was no work in my field (mechanical engineer), even with my highly lucrative education and experience, if there was no work, I would adjust accordingly.

Keep in mind, LME and I do agree that it's not about letting the market go with no regulation. It needs a very small amount (mainly to ensure information is true). LME and I have both said we need some. You even cite that in saying that collusion is illegal. But I cannot disagree with you more that this works "in theory" but not in reality. It absolutely does work in reality. It started in the old days and has progressed until now. Communities became cities, states, nations and onward, and the economics remained the same. The one problem: government involvement. A free people should not have the government running their business. The theories LME described, that I believe in were right, and the one notion highlighted in this is true as well: the less government involvement, the better they would work.

"You're argument claims government involvement is the problem with why the markets can't operate the way they should. (am i summarizing that correctly?)

So why does government get involved?

It seems to be government is involved because corporations want them to be.

The banking sector cried for help and the FED warned total collapse during the "financial crisis" and they lobbied government to get involved. They had meetings and stuck deals with corporations to save them. The corporations were asking for this help......

With that said i guess what i struggle with is what is the difference between government and business.....

AND how can you hold one accountable and not the other.

From they way u post its as if you see no flaws with business and how it interacts to effect government. In the same note you constantly go on about how government effects business but fail to speak about how business is asking government to intervene and effect its practices.

On the my previous posts i gave stats on how the number of lobbiests have been rising and the amount of money put into politics from companies has gone the last 10+ years.

Its clear that at the same time you are yelling government needs to get out of business we are at a point were businesses seems to be more involved in government that ever before.

Im just trying to get yall to realize that both sides have to be held accountable.

You can't say stop giving food stamps but then say exon mobile deserves a tax break even thought they are making record profits! that's crazy! "

Not to sound stuffy/arrogant, but I wasn’t wrong about what I said. Not that you are, but you’re simply arguing completely different points than I was.

I wasn’t speaking specifically about America, but about the theory of economic and free market principles overall. I did specifically say that collusion is illegal in America. I’m not sure I understand why you repeated it as a point against me?

And the fact that it is illegal in America, and benefits us as so, is exactly the point I was making. Our government made collusion/monopolies/trusts/price-fixing/etc illegal. The key word being, government. As in, the government stepped in to control to help foster the free market. And it IS in a way that benefits consumers.

That was my point in using that example; in that government involvement can help protect the free market as well. As it would if it had control over OPEC.

Your example of how to beat inelastic good price fixing is also unfortunately irrelevant to the point I was making. I wasn’t trying to say that ‘price elasticity will allow corporations to set any prices they want’, as that’s ridiculous. My point revolves around two facts: elasticity does exist in varying levels, and that this elasticity can be exploited. It is a fact that some goods (often deemed ‘essential’ or important) respond less to changes in price than other goods (deemed non-essential); and through this a collaboration between corporations can take advantage of it to maximize profits. That is my point. There is no way to say that isn’t true. Why would collusion be illegal if it didn’t hurt the consumer?

Of course, if the companies collaborate and say “we want to charge $1000 per gallon of milk”, exactly what you said will be true. Nearly no one will buy milk. But that is obviously not the point I’m making.

What they can do though, is take non-elastic product, agree to fix prices at one level (and not undercut), and then not have to compete on prices. Or race prices by a small % within the elasticity measure. If they wish, they could even take it one step further and make their products exactly the same and share profits, or purposefully drive out competition. All of which eliminates a major part of the free market.

Again, when you went on to speak about labor, I never made the point that ‘labor is completely non-elastic.’ Again, that’s ridiculous. Forcing a minimum wage of $100/h will bankrupt most companies, just like trying to hire people at $0.01/h will get no results at all.

I never argued those extremes. I merely made the point that with non-elastic products/services, you can get away with far more in setting prices/wages while maintaining similar demand. That is absolutely what it means to be elastic. To say that doesn’t exist is to deny there is any measure of price elasticity whatsoever.

@Loyalty Watcher - I'm not being mean, but how old are you? To be fair... I'm pushing 60, have worked my whole life, raised a great family - and I'm (still) saving toward my own retirement.

Throughout my life, most of my employment has been minimum wage - or below. As a tipped employee - the quality of my service determines much of my income; I've worked hard to develop that skill and have done rather well. I've also managed, and understand the very thin line that small business walks between financial success and total failure. Government regulations - the minimum wage requirement being just one of legion, can make or break it.

I digressed. From your posts, I believe you're probably under 30 and have neither the education - nor life experiences of LME and others, who've been trying, albeit unsuccessfully to get you to open your mind. Again - to be fair - I have no formal education. That doesn't mean that I'm stupid - or unwilling/unable to learn.

Your postings reek of the same tired, and for the most part completely biased, talking points that I see coming from Occupy Wall Street, Van Jones, Francis Fox Pivens, President Obama, etc. etc. etc. Your links site only left-wing 'journalists' with a clear agenda - the destruction of capitalism... the underlying plan of the Occupy movement.

Two more questions: Should you and your like minded individuals succeed in wrecking our American system, just what would you replace it with? And, have you studied history, including recent history - with an eye to the rise and fall of various socioeconomic systems worldwide, and the causes?

Dara.... all i can do is laugh. I am 25, I work a full time job, Own my own business (that has doubled growth every year the past 3 years),I will have my house paid of in 7 more years, I own my car, and i have around 3k in debt total not including my house (35k).

Every point i made was backed up by statistics

Every point you made was backed up by....... fox news mabee? lol you had no stats.

I know you older folk think you know it all but lets be real

Yall are the reason we are in this situation. Your chanting of deregulation and failure to control ether party has led to a financial collapse and the attack from both parties on our civil liberties. You have allowed corporations to take over our government. You have allowed the stock market to turn into a Casino. You have lived through some of the biggest financial crimes ever commited in the history of our planet.

And all the while im supposed to listen to you lol

You sound like a divorced guy giving a married guy advice on how to keep his girl...

You have failed your generation has failed

I have no intentions of listening to you, especially since you have proven you dont even real legislation, you just comment on what you think it will do lol.

Do some research please and back up your points, i backed mine up.

I still have not got a reply on a majority of what i said, cause there is no good reply instead people picked out one point and focused on that.

You come on here and harp about education, but at 25 years old, you know nothing. Your economic understanding is that of a 7 year old. Numerous users have come on here trying to show you how things really work (both theoretically and out of the book) but yet you discount it with your lack of understanding and education on the subject. You claim you want to educate people, but you're really trying to propagandize them while ignoring sound economic facts. You ignore these sound economic facts simply because it goes against the propaganda you spew. You really should learn to listen more, and not get on people that actually know things you don't.

And oh yah, education doesn't make one person better than another. Like I said, Dara is much more articulate and can give an argument better than you can. And she is a LOT better of a speller (your spelling shows your barely squeaked out of 7th grade).

Apparently Anonymous isn't very educated either. Otherwise it would ignore everything from HERE on out. Maybe before you insult people about their level of education you should try to cover the tracks of your colossal ignorance, you dumb twit.

Though Dara self admits no FORMAL education, anonymous, she is far more educated than you will ever be. It's hilarious to me how you come on here and sling insults with no argument or position, and of course, no facts and then you resort to insults. That shows a true lack of education and understanding.

Loyal Watcher.....I have perused through a lot of your posts on this thread and looked at your links. Why are all of your links a dozen years old or older?

In one of your links they were bemoaning the "corporate welfare". Here are ordinary business expenses they call "tax loopholes": "paying to advertise their products; training workers; building new factories; supporting research and development"

In your condescending post to Dara you mentioned your business has doubled growth for three consecutive years. Did you use the "tax loophole" of deducting the cost of advertising which generated sales/leads (hopefully it generated sales/leads)?

You also mentioned corporations putting profits before people. Did you increase your employees pay proportionately (double)? Did you increase the number of employees or are you just sitting on all that money? How did you put people before your profits, or are you exempt from the standards that you expect out of others?

Would you prefer that big pharma didn't do all that pesky research and testing of drugs? If that were not tax deductible the user of the drug would be absorbing those costs in higher prescription prices or gambling on untested drugs.

I am surprised that you are 25. By some of the following quotes of yours I would have guessed much younger.

"I know you older folk think you know it all but lets be real""I have no intentions of listening to you, "

Also, could you explain that whole:

"Yall [older folk] are the reason we are in this situation. Your chanting of deregulation and failure to control either party has led to a financial collapse and the attack from both parties on our civil liberties. You have allowed corporations to take over our government. You have allowed the stock market to turn into a Casino. You have lived through some of the biggest financial crimes ever commited in the history of our planet."

So where do we begin to assign the blame, age wise? Everyone older than you?

What was "deregulated" that led to the financial collapse? How has everyone older than you or at least 60 (or whatever older folk is) "allowed corporations to take over our government"?

I could go on with the questions, but, since you couldn't or wouldn't even answer Dara's two easy questions I am sure you won't answer any of mine.

The Herd

http://the405radio.blogspot.com/ - Great radio show hosted by John Grant (@JohnG405) - The Elephant in the Room has been on this show in segments and as a co-host. Click the link to listen to previous shows